Home Builder Soaks Up Solar, But Will Buyers?

Builder KB Home is turning to rooftop solar panels to brighten home sales.

The company this week made solar power systems standard across most of its Southern California division, the company’s largest that includes Los Angeles and San Diego and boom-to-bust Riverside County. KB Home, one of the nation’s largest builders, hopes the offering, which it says can reduce monthly power bills by more than half, will stand out in a market brimming with bargain-priced foreclosed homes.

As we’ve reported, builders have spent the last few years rolling out one environmental feature after another, only to be disappointed that buyers haven’t shown great interest. Buyers are far more concerned about location and price and are largely unwilling to pay extra for features that may be hard to understand and difficult to value. Consumers might be willing to cough up a few grand for granite countertops, but a super-efficient HVAC system won’t likely make the cut.

Same goes for solar panels. Few people “know what a photovoltaic panel really is,” says Steve Ruffner, president of KB Home’s Southern California division. “Solar can get real technical … it will put a lot of people to sleep.” (For the record, a photovoltaic panel is simply the panel of the roof.)

This lack of consumer understanding is something KB Home came across this year as it tested the solar program in 10 California communities. The company decided to downplay the environmental aspects, make the panels standard and play up the cost savings they offer over new and existing homes.

Consumers seemed to get it: Sales in the 10 test communities were 30% higher than in areas where they weren’t offered. The company wouldn’t give specific sales numbers, but in this environment, where new home sales are expected to come in at the lowest number on record and few consumers can actually qualify for a mortgage, any sales increase is an accomplishment.

The panels – each community comes with a set number of rooftop panels, but customers can pay for more – use sunlight to generate electricity. This unused electricity is sold back to the grid, reducing the home owner’s electricity bill. KB Home says home owners can save about $2,000 each year.

Ashly Gage purchased a KB Home that came with a six-panel solar energy system this summer. The power bill in a rented townhome was near $400 – which we assume includes plenty of air conditioning. But, according to the Press-Enterprise, the first power bill in her 2,200-square-foot Eastvale home was $132. Mr. Ruffner says he’s seen monthly bills as low 11 bucks.

KB Home declined to say how much the panels cost, but Mr. Ruffner says the company got a good deal because it purchased in bulk. The offering raises the home’s price slightly, though the builder maintains its price tags remain competitive.

So, is there any chance of KB Home making solar panels standard on rooftops nationwide? “I wouldn’t go that far right now,” says spokesman Craig LeMessurier. (It is an option in other divisions.)